Boots, the UK health and beauty retailer that hopes to merge with Alliance Unichem next year, said today trading profits fell in the first half as it invests in a revamp of core operations.
Boots said group trading profit before tax fell 9.6 per cent to £163 million ($289.6 million), incorporating a £45 million pound increase in costs for investment in the 1,400-strong chain.
Chief executive Richard Baker reported a shift in tone in meetings with investors over the Alliance deal from the surprised to the factual as the company begins to furnish competition authorities with the required merger data.
Boots has continued to invest in infrastructure, operations and prices amid a tough retail environment, opening seven new edge-of-town stores in the half, relaunching proprietary ranges and revamping its beauty halls.
Mr Baker told a conference call he expected the full-year cost increase to be about 90 million pounds, and promised further price cuts to add to the 700 lines that were reduced in price by an average of 11 per cent.
While customer numbers in store fell by 2.9 per cent on last year, the group's "Advantage" loyalty card programme was resulting in an increased number of transactions per customer and higher spending per shopping basket, he said.
"It's pretty good, I think it's towards the top end of what the market was looking for. There's evidence of a bit of stabilisation as fare as the core operations are concerned," one analyst said.
Shares in Boots, which have outperformed the general retailers' index by about 4 per cent this year, traded 0.4 per cent slightly lower on a softening London market to stand at 603-1/2 pence by 7.49am.